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A secured credit card is a credit card that requires a security
deposit. These types of credit cards are generally for people with
no or damaged credit. Your credit line will represent a percentage
of your security deposit or savings account balance. If you
establish good credit with the card, the credit card issuer may
extend your credit line or offer you an unsecured card.

2) What is an unsecured credit card?

An unsecured credit card does not require a security deposit. Such
credit cards are intended for individuals with good or excellent
credit.

3) What is a grace period?

A grace period is the amount of time the card holder has to pay
the balance, before interest is charged to the balance. Grace
periods vary, but usually range from 10 – 25 days depending on the
credit card issuer.

4) What is a balance transfer?

If you already have a credit card, you can transfer your existing
balance on the previous card to a new card. Some credit cards
offer low balance transfers.

5) My credit is damaged. Can I still get a credit card?

Yes. Even if you have bad or damaged credit, you can still obtain
a credit card. You will most likely have to apply for a secured
credit card, which requires a security deposit.

6) What is an Annual Fee

A flat, yearly charge similar to a membership fee

7) What is an Annual Percentage Rate (APR)

The APR is a measure of the cost of credit that expresses the
finance charge, which includes interest and may also include other
charges, as a yearly rate.

8) Finance Charge

The dollar amount you pay to use credit. Besides interest costs,
it may include other charges associated with transactions such as
cash advance fees.

9) How do airline mileage plans
work?

Most airline mileage plans
co-branded, issued by a financial institution and an affiliate
airline. Typically, air miles are earned with every use of the
card. Most cards offer one mile per dollar spent. These earned
miles are transferred to the cardholder’s account with that
airline, where they may be redeemed. Some banks also offer airline
mileage plans without affiliations, and the customer may choose
the airline.

10) What additional fees should
I be aware of when applying?

It is important to understand that
card issuers are required by law to disclose any fees to
customers. You must read all the fine print to discover these
disclosures. Some cards have an "over-limit" fee, which
is usually $20 to $25 when you have charged something beyond your
credit limit. Another fee to be aware of is a late payment fee,
which again ranges from $20 to $25, for payments made after the
due date. There is also often a transaction fee for cash advances.
This fee may be a set rate, such as $2, or a percentage (commonly
2%-5% of the amount advanced), or a combination of the two. These
fees are in addition to the regular interest rate.

11) What is the benefit of
having a gold or platinum card?

The gold and platinum cards are set
apart from other cards because of their higher credit limits and
extra perks. They vary according to each card issuer, as well as
the credit status of the customer. Various features that these
cards offer include car rental collision insurance, travel
accident insurance protection, and extended warranty insurance.
Often, a higher household income is required.

Disclaimer:
This credit card FAQs page is a product of CreditCardDiva and does
not refer to any specific credit card or product mentioned on this
website. We offer FAQs to help inform the consumer and are in no
way suggesting any particular course of action. It is the
customer’s responsibility to read the terms and conditions of any
product offered through CreditCardDiva.

Using your Visa card online is easy. And you’re protected in
exactly the same way you are when you use your card at the store,
order from a catalog by mail, or call in an order over the phone. And
in case of a problem, you always have safeguards from Visa against
unauthorized card use, theft, or loss.

Tip #2Keep a Record of Your
Transaction

Just as you save your receipts when
shopping at the mall, you’ll want to keep a record of your Internet
purchases. Back up your transactions by saving and/or printing the
online confirmation of your order. These records are just like the
receipts you keep when shopping in the physical world.

Tip #3Secured Credit Cards

If you have no credit or a negative credit history, it can be
difficult to obtain an unsecured credit card. But, what you may not
know is that you may be able to qualify for a secured credit card,
which can offer many of the same benefits as an unsecured card. A
secured credit card is much like a secured loan. You are required to
deposit money into a savings account or a certificate of deposit as
collateral for a line of credit. The card has the same appearance as
an unsecured card and usually offers the same convenience and charging
privileges as a traditional unsecured credit card.

While almost anyone can
apply for a secured credit card, there are some limitations. Most
issuers do not accept applicants that have been convicted of credit
card fraud, have outstanding liens on their property, or are filing
for bankruptcy.

Finding the best card for
you requires research. You should determine what features are most
important to your financial situation and spending style, measuring
them against the costs associated with each offer. Factors such as
application fees, annual fees, finance charges, accrued interest on
the deposit, available line of credit and minimum savings deposit are
some of the most important considerations.

In most cases, an
application fee is required by the insurer, which adds to the cost of
obtaining a secured card. The fee is usually non-refundable, even if
you’re not accepted by the issuer.

Once you’re accepted for
the card, you are required to make a deposit into a savings account or
certificate of deposit as security. The average minimum deposit
required can run around $300. The amount of money you deposit should
depend on your income and the line of credit desired. However, some
insurers will offer credit the same or greater than the amount
deposited; some others may offer a credit limit lower than the amount
deposited.

Most issuers will pay you
interest on your security deposit. The more money you wish to or are
required to deposit, the more important it is to have a card that
offers respectable interest payments.

Like most secured credit
cards, insurers of unsecured cards charge additional fees for use of
the card and services associated with the card, such as, cash
advances, late payment fees, and fees for charging over the limit or
non-sufficient funds. Carefully review all information provided by the
issuer to determine how and when such charges will be incurred.

If you wish to cancel your
secured card, do so in writing. Credit card issuers have different
policies concerning the amount of time before you receive your refund.
Also, keep in mind that if you have an outstanding balance, most card
issuers will use your security deposit to pay the remaining balance.

.Tip #4Student Credit Cards

Student credit cards can be used
anywhere in the world where it is accepted. When choosing a student
credit card make sure that you look at the Annual Interest Rate. Most
student credit cards have a very high APR. Average APR for student
card was 18.90% for the August month. This average was based on the 30
credit cards that our research team rated. Most Student Credit Card
Issuers will give student card to any student who applies.

A Few Tips That You Should Know:

If you have a student credit card,
then you most likely are eligible for discounts

ATM Card:
A card used in an automated teller machine (ATM) which may access a
credit or a debit account to complete banking inquiries and fund
transfers between accounts.

Affinity Card:
A credit card endorsed by groups such as colleges, sports teams,
professional organizations, or special interest groups that are
offered to their alumni, fans or members. Typically, use of the credit
card gives financial benefit to the endorsing organization.

Annual Percentage Rate:
Often referred as the "APR", this shows how much credit will
cost you on a yearly basis.
Annual Fee: The annual cost of membership to a particular credit card
account. Most banks now have products without annual fees.

Bankrupt:
The status of being legally declared unable to pay your debts as they
become due. Federal bankruptcy laws have been enacted which allow a
person or organization to liquidate their assets to pay a reduced
amount to their creditors or which allow the rehabilitation of the
debtor by requiring creditors to accept reduced payments from future
earnings of the debtor. A declaration of bankruptcy will remain on a
person’s credit report for at least 10 years and in some cases
indefinitely. Declaring bankruptcy is generally considered a last
resort.

Balance Computation Methods:
Credit card issuers assess finance charges by applying the APR to a
balance. There are several methods for determining your balance. Two
of the most frequently used balance methods are as follows:
*Average Daily Balance Method – This balance is figured by
adding the outstanding balance and deducting payments and credits for
each day in the billing cycle, and then dividing by the number of days
in the billing cycle. Some credit card issuers include new
transactions in this calculation while others exclude new
transactions.
*Two-Cycle (or Double-Cycle) Average Daily Balance Method – This
balance is calculated by taking the sum of the average daily balances
for two billing cycles. The first balance is for the current billing
cycle and the second balance is for the previous billing cycle.

Billing Cycle:
The length of time between billing statements. A billing cycle is
typically 30 days but because of weekends, holidays, and the variance
in the number of days in a month, a billing cycle may be as short as
27 days and as long as 33 days.

Business Card (Business Credit Card):
A bookkeeping and tax preparation tool for many businesses, these
credit cards are generally issued to corporate executives or business
owners. They make it easy to keep business expenses separate from
personal charges.

Charge Card:
Unlike revolving credit cards, charge cards must be paid in full every
month. The American Express card is an example of a charge card.

Chip Card:
There are various types of Chip Cards, sometimes called Smart Cards.
Electronic chips allow these cards to function in different ways: as
credit cards, debit cards, frequent buyer or rewards program cards,
I.D. cards, or any combination. Many college I.D. cards are chip
cards. These may or may not be credit cards.

Co-Branded Card:
A credit card sponsored by both the issuing bank and a retail
organization such as a department store or an airline. Cardholders
benefit through account enhancements that allow discounts or free
merchandise from the sponsoring merchant based on account usage.
Consumer Credit Counseling Service (CCCS): This is a non-profit
organization that has helped thousands of people get out of debt. CCCS
counselors can advise you on how to develop a budget you can live
with, and can be invaluable in helping you negotiate repayment plans
with your creditors. This service is confidential. To contact the CCCS,
call 1-800-388-2227.

Credit Bureau:
Credit Bureaus collect and report vital facts about your financial
habits; for instance, whether or not you pay your bills on time. These
facts are then compiled into a "credit report," which can be
accessed by potential creditors, employers, etc. The three major
credit reporting agencies are Equifax, Experian and TransUnion You can
contact them at the addresses below.

Credit Card:
Unlike charge cards, these cards allow you to "revolve" your
charges; that is, carry over portions of your balance from month to
month. However, if you do not pay your balance in full, you’ll be
assessed finance charges. To protect your credit rating, be sure to
pay at least the minimum amount due by the payment due date.

Credit Card Insurance:
This insurance protects you if you are unable to pay your credit card
bills because of illness, unemployment, or other severe conditions.
Under these circumstances, the insurance provider will pay your
minimum payments.

Credit Line:
When you receive a new credit card, you’re usually issued a set
"credit line." That amount is the most you can charge on
your account. Under some circumstances, your card issuer may increase
or decrease your credit line.

Credit Report:
This is record of your credit history. It shows whether you pay your
bills on time, how much debt you have, etc. Your report is compiled by
credit bureaus and released to lenders and others.

Debit Card:
A convenient way to "pay as you go," this enhanced card
subtracts money from your account when you use it to make a purchase
or get cash.

Equal Credit Opportunity Act
(Implemented by
Federal Reserve Regulation B):
This federal law protects your rights against being denied credit
because of sex, race, color, age, national origin, or religion. It
also guarantees your right to have credit in your given name or your
married name, the right to know why if your credit application is
rejected and the right to have someone other than your spouse co-sign
for you.

Fair Credit Billing Act:
This federal act protects many important credit rights, including your
rights to dispute billing errors, unauthorized use of your account,
and charges for unsatisfactory goods and services.

Finance Charge:
The total cost of credit including service fees, late fees,
transaction fees, and other charges.

Fixed APR:
Unlike a "Variable APR," this type of APR does not change
based on changes in an index.

Grace Period:
If you have a credit card, a "grace period" means the period
of time your issuer doesn’t charge you interest on purchases. Be sure
to read the fine print, though. Some credit card issuers give you a
grace period only if your account is paid up and doesn’t have a
balance carried over from the previous month.

Interest Rate:
Credit is not free! When you use money provided by a bank or financial
institution, the interest rate reflects the amount they charge you for
that service.

Introductory APR:
This is a temporary, usually low, interest rate (expressed as a yearly
rate) offered by providers to "introduce" you to their
services. It will usually go up after a certain amount of time.

LIBOR(London interbank offered rates):
Five major London banks daily determine these fixed rates for specific
maturities. What does this mean to you? LIBOR may be used by some
banks instead of the Prime Rate to set Annual Percentage Rates.

Minimum Payment:
You’ll see this on your credit card statement. It’s the lowest amount
you can pay every month, based on that month’s balance at the time of
billing.

Performance (or Risk Based) APR:
A performance APR is similar to a variable APR but it is based on your
payment performance. There is a standard APR when you open the account
but that APR will increase if you are late making a payment. If you
are late making a payment more than once within a specified time
period (usually between 6 and 12 months) the APR may increase again.
If the APR has gone up because of a late payment or late payments it
may go back to the standard APR if you are not late on your payments
for a certain period of time (typically one year).

Previous Balance:
How much you owed your card issuer at the end of your last billing
period.

Prime Rate:
"Prime" means "best," and this rate is what banks
charge their best commercial customers for loans. The Prime changes
often, is reported daily in the Wall Street Journal, and is used as a
reference point for many businesses. For instance, the Prime Rate is
used by some financial institutions to set the APR for credit cards.

Principal:
Unlike interest or fees, the "principal" reflects the actual
dollar amount of the purchases you made, or the balance that remains
on your loan or credit card account.

Purchasing Card:
A real convenience for businesses, this card eliminates the need for
time-consuming purchase orders. A company simply places orders
directly with suppliers and charges them to the card. Usually used for
purchases of $5,000 or less.

Secured Card:
A great "first credit card" or way to re-establish your
credit rating, this kind of card is "secured" by money you
deposit in a designated savings account. For instance, if you deposit
$500, your credit card limit generally will be for that amount. If for
some reason you cannot pay your credit card bills, your credit card
issuer will be paid from the savings account.

Smart Card:
see Chip Card.

Transaction Fees:
Fees which are charged when you make certain types of transactions.
Transaction fees are typically assessed on cash advances and cash-like
transactions such as money orders, wire transfers, and casino gaming
chips.

Truth in Lending Act
(Implemented by Federal Reserve Regulation Z):
This federal law protects you by making sure lenders tell you about
the costs, terms, and conditions at the time they offer you a loan or
credit card.

Variable APR:
The Variable Annual Percentage Rate (expressed in yearly terms)
fluctuates based on an index such as the Prime Rate or LIBOR.

Banks and credit card issuers
consider a variety of factors when you request an extension of credit.
By far, the most important factor is the Debt to Income Ratio(DIR).

Debt, in this situation has a special meaning. It includes all
sources of potential credit, debt and liabilities that are available
to you. So for example if you have a credit card with a $2,000 credit
limit but usually carry only a $100 balance month-to-month, creditors
will use the $2,000 figure as your debt on that credit card account,
not your actual debt of $100.

Having too many credit cards that you
don’t use can negatively affect your creditworthiness. Such items as
outstanding mortgage balances and school loans are also included in
your Debt calculations. Contrary to popular belief, Stafford
loans and other government subsidized loans are included in your Debt
calculations.

In evaluating credit worthiness of a
consumer, banks and other creditors calculate your Income by
including all sources of income, including salaries, bonuses, rental
income (if you are a landlord for instance) and benefits you receive
from the government. It is thus advantageous to provide your creditors
with verifiable information on all your income sources. As an aside,
income obtained by illegal means cannot be considered by creditors in
calculations of your Income.

High Debt to Income Ratio is a
warning sign to creditors, and is a likely reason that your request
for extension of credit will be rejected, be it credit card, mortgage
or car loan. From the viewpoint of banks, an optimal DIR is about
20-35%. Surprisingly enough, a very low DIR may also cause your
application for credit to be rejected. In this situation, your past
credit history becomes very important. What the banks want to know is
why do you have so little credit? Is it because you are a bad credit
risk or is it that you did not request credit before.

Late
Payments

In evaluating your request for credit,
creditors use your credit profile (also known as credit history).
Aside from the items that were discussed above, creditors pay great
attention to whether you have had a history of late payments. While it
may seem to be quite insignificant if you are late with your payments,
creditors have no way of knowing whether it is a result of oversight
or financial inability to pay, and by default they make assumption
that it is the latter.

You can get a copy of your credit
report from one of the major credit bureaus listed below.

Your report will usually include the following: credit inquiries,
bankruptcies, payment history, previous creditors, credit account
information, personal identifying information, and any other
information related to your credit history. The pricing per copy is
variable, depending on the reporting agency.

If you’ve
1) been denied credit because of information in your credit
report
(request within 60 days of denial)
2) you receive public assistance
3) you’re unemployed and intend to apply for a job
4) your report is inaccurate due to fraud
5) you’re a resident of a qualified state, or
6) you haven’t requested a copy in the previous 12 months,
you may be entitled to a free copy of your
credit profile.

Include the following with your request:

Full name (including Jr., Sr., II)
Spouse’s first name (if married)
Social security number
Current and previous addresses within the last five years
Current employment information
Telephone number (home)
Date of birth
Signature
Any fees